Does Insurance Technology Render Strategy Obsolete’
Imagine you are the manager of a Major League Baseball team. Each year your team makes the playoffs, sometimes the World Series, but you never quite get to hoist the trophy. You’re somehow missing the final push that takes you over the top—to give you that competitive advantage. Then you make the move. After thorough review and discussion with the rest of your team, you acquire the best player in the game—the final piece of the puzzle.
Perhaps he’ll shake things up a bit because “things” will be done differently. It might take a little getting used to his style because it’s a whole new way of playing the game; definitely not the way you’ve been running the team for the past 10 or 20 years. Now you just sit back and watch. You can win in your sleep, right? Wrong.
Fundamentals and sound strategy
As every fan knows, the champions in baseball, even teams with all-stars at every position, don’t win unless they combine sound fundamentals and execution with solid strategy that achieves sustainable advantages. And, just as important, they keep everyone playing together in harmony in pursuit of the common goal—to be the best.
Many would agree that Web technology can bring to an insurance carrier the competitive advantages a top-flight ballplayer can bring to a team. Technology can provide a distinct competitive advantage. With the right solution in place a carrier can increase speed to market and productivity, reduce operating costs, and improve underwriting performance. Technology makes the jobs of agents and brokers easier, and improves the experience of your customers.
And make no mistake, your customers are your fans. Make “playing” with you a good experience for them and you’ll win in the marketplace. In any business, success equals attracting new customers, fans that will promote your company. In fact, recent research from organizations such as RoperASW shows that most products and services are most successfully promoted and sold through word of mouth.
Making good strategy better
However, without a solid strategic direction that sets your company apart, all the benefits technology can bring lead nowhere. The biggest mistake a carrier’s management team can make is to sit back and rest on its laurels after the “latest and greatest” technology has been implemented. Good execution will never make up for a weak strategy. However, the right technology can make good strategy better.
Now, more than ever, fundamentals and strategy are critical for success in growing profitability and accomplishing the key goals of every insurance executive—achieving financial strength through adequate reserves and high ratings, and improving underwriting while in a hard market versus attempting to accomplish this in a soft market.
One of the biggest challenges C-level insurance executives face is determining how to get the most out of Web technology. For many the immediate decision may be to replace a legacy system with a new Web-based policy administration system. For others, there is a decision on how to implement the technology within their existing infrastructure with the capability of adding new components in the future.
However, an easy—and seemingly safe—trap to fall into is to piecemeal and patch new technology into a legacy system.
If you were the manager of the baseball team, would you have your new star player, the one who could put you on top, pinch hitting or playing a utility player role? You wouldn’t be the manager for long, that’s certain. Like anything else, technology can be used wisely or unwisely. To deliver results, technology should enable the business strategy, not the other way around.
In sync
One of the principles of strategic positioning is that strategy defines how all the components of a company work and fit together. It is critical that the entire team—the chief executive officer/president, chief operating officer, chief information officer, chief technology officer—are all working from the same game plan.
Like any sports organization, if one key player isn’t in sync with the strategy, then the entire team most likely will not realize the true benefits of the technology, and the chances of being the leader will be minimized. For example, until recently, the CIO at many carriers was the recipient of a company’s strategic plan versus being a part of the planning team. Making all members of the C-level suite part of the strategy and Web technology team ensures success.
Elite athletes, from Magic Johnson to Alex Rodriguez to Diana Taurasi, stand out from other star performers by making their teammates play at a higher level. Web technology offers the same potential for an insurance company. It can be used to leverage and build on existing strengths of the company.
Being successful is one thing. Being on top is another. Being on top year after year is the ultimate. Teams that combine the fundamentals with standout Web technology, that work together toward a common goal, will be the ones holding the “trophy” over their heads at the end of the year.
Geoff Smith is on the board of directors at ePolicy Solutions (www.epolicysolutions.com). He has expertise in the business insurance arena that comes from a 30-year career history with the Hartford Financial Services Group.